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Quick Hynix deal planned

Uni-Chem of South Korea expects to get the mothballed plant up and running soon to jump into the solar industry

By Sherri Buri McDonald

The Register-Guard

Appeared in print: Tuesday, Sept. 29, 2009, page A1

Uni-Chem, the South Korean company that is buying Hynix’s Eugene computer chip plant, wants to get started on converting the plant to solar manufacturing even sooner than initially reported, according to a Uni-Chem official contacted in Korea on Monday.

Timing is critical because industry analysts predict that the United States will be the “next big market” for solar in coming years, Uni-Chem spokesman Yoon Ho Kim said.

As a newcomer to the solar industry, Uni-Chem wants to get started quickly, he said. “The faster you are able to come into the market, the bigger the piece of the pie you’re able to receive,” Kim said.

Uni-Chem hasn’t purchased the plant from Hynix yet, but it anticipates buying it soon for $50 million.

The first thing Uni-Chem plans to do as the plant’s new owner is to spend $100 million to $150 million on renovations and equipment to convert the third floor to solar cell manufacturing, Kim said.

Early next year, Uni-Chem hopes to begin hiring workers to train on its equipment, he said. By 2010 or 2011, Uni-Chem plans to produce enough solar cells annually in Eugene to generate 1 gigawatt of energy and anticipates employing 1,000 workers in Eugene, he said.

Also in the works are plans for a second factory on the land west of the existing Hynix plant.

It would have a similar footprint to the existing plant, although perhaps not as many floors, Kim said.

That plant would house solar wafer manufacturing and module production, he said. Wafers are made into solar cells, which are then assembled into modules, or panels, to be installed to generate solar energy.

Kim didn’t have an estimate of the cost to build and equip the second plant, or of how many additional workers would be needed to operate it.

He said the second plant was a midrange project — not expected in the next couple of years, but not 10 years off, either.

A U.S.-based solar executive who is working with Uni-Chem to set up plants in Eugene and in Hudson, N.H., said Uni-Chem’s total costs in Eugene could run as high as $1 billion.

Uni-Chem reviewed more than 20 facilities in the United States, from New York to California, before deciding on the Eugene plant, Kim said.

“There were things that we liked about the Hynix facility that stood above all the others,” he said, specifically its size and the potential for expansion.

Proximity to U.S. customers, various federal and state incentives and the facility itself also attracted Uni-Chem to the Eugene site, Kim said.

Uni-Chem, a leather products manufacturer with sales of $75 million last year, is diversifying into the emerging solar industry.

It has lined up a group of undisclosed private investors, including some in banking, in Korea to bankroll its expansion into solar and into the United States, Kim said.

He said the company is actively lining up U.S. customers in the private and public sectors, but it is premature to reveal them.

“(U.S.) government contracts (will be) a significant part of our business,” Kim said. Those contracts have strict requirements that the products are made in the United States, he said.

Uni-Chem will be hiring locally for a range of production and professional positions, Kim said, from “folks in R&D to janitors who clean the hallways.”

“We are very interested in the former Hynix workers,” he said. “There are lots of similarities between the semiconductor industry and the solar industry. We believe if you have training or work experience within the semiconductor industry, it’s not a very hard job to educate yourself in the solar industry.”

Kim said Uni-Chem would offer wages and benefits comparable with what Hynix paid its workers.

Hynix has said its workers’ annual pay averaged $52,000, and annual total compensation, which included salary and benefits, averaged $70,000.

Uni-Chem, like any newcomer to the solar industry will face challenges, industry experts said.

Christopher Dymond, a former Oregon Department of Energy solar expert who now works for a large photovoltaic system developer, said his biggest question is what is Uni-Chem’s pipeline of projects that are committed to using its products?

“If you’re going to get in big, you really do need to have a way of selling your product,” he said. “This company is going to have to find a way to line up projects in order to get capital to do the manufacturing facility. That’s a real challenge. Just building a factory isn’t enough anymore. That’s two years ago — that’s so 2007. Now you have to build the factory and develop a project pipeline.”

He and other industry experts said Uni-Chem is correct in projecting that the demand for solar products in the United States will take off soon.

“The thought process everyone is using is some time in the next few years, the U.S. market triples in size, and it happens very quickly, so you want to be here before that occurs,” Dymond said.

“You want to have your factory limping along, turning a small profit, so when the U.S. market really grows rapidly, you’re already established.”

But the market isn’t easy to predict, he cautioned.

“What really drives the solar industry is going to be U.S. electricity demand,” Dymond said. “If it rises rapidly again, we’re going to be going after renewables like crazy. That’s the ultimate unknown.”

Paula Mints, a principal analyst with Navigant Consulting PV Services Program in Palo Alto, Calif., said a rush of newcomers jumped on the solar bandwagon during the 2004 to 2008 boom, but it has slowed in the current soft market.

“We shall see if they really enter,” she said, referring to Uni-Chem.

“This company faces start-up challenges, along with the long time line from announcement to actual production,” Mints said.